UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarter ended |
|
|
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from __________ to __________ |
Commission file number:000-55957
WEWARDS, INC.
(Exact name of registrant as specified in its Charter)
Nevada | 33-1230099 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
2960 West Sahara Avenue Las Vegas, NV | 89102 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 702-944-5599
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨ Non-accelerated filerþ Emerging growth company¨ | Accelerated filer¨ Smaller reporting companyþ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
As of January 3,October 4, 2019, the registrant had107,483,450 shares of common stock issued and outstanding. No active trading has been established as of January 3,October 4, 2019.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION |
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FINANCIAL STATEMENTS | 1 |
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 10 |
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 11 |
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CONTROLS AND PROCEDURES |
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PART II. OTHER INFORMATION |
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LEGAL PROCEEDINGS |
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RISK FACTORS |
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
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DEFAULTS UPON SENIOR SECURITIES |
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MINE SAFETY DISCLOSURES |
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OTHER INFORMATION |
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EXHIBITS |
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FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
GENERAL
Throughout this Form 10-Q Quarterly Report, the terms “We,” “Registrant,” “Wewards, Inc.,” “WEWARDS” and “Company” all refer to Wewards, Inc., the corporate name of which was Global Entertainment Clubs, Inc. until January 8, 2018.
PART I. FINANCIAL INFORMATION
WEWARDS, INC.
INDEX TO FINANCIAL STATEMENTS
Condensed Balance Sheets as of | 2 | |
Condensed Statements of Operations for the three | 3 | |
Condensed Statement of Stockholders’ Deficit for the three months ended August 31, 2019 and 2018 (Unaudited) |
| |
Condensed Statements of Cash Flows for the |
| |
Notes to the Condensed Financial Statements (Unaudited) |
|
WEWARDS, INC.
CONDENSED BALANCE SHEETS
(unaudited)(Unaudited)
|
| November 30, 2018 |
| May 31, 2018 |
| ||
ASSETS |
|
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|
| ||
Current Assets: |
|
|
|
|
| ||
Cash |
| $ | 4,776,289 |
| $ | 10,794,298 |
|
Prepaid expenses |
|
| 116,656 |
|
| 316,666 |
|
Total current assets |
|
| 4,892,945 |
|
| 11,110,964 |
|
Intangible assets |
|
| 806,325 |
|
| 374,125 |
|
Total Assets |
| $ | 5,699,270 |
| $ | 11,485,089 |
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|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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|
|
|
|
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Accounts payable |
| $ | 1,197 |
| $ | 160,536 |
|
Accrued interest, related party |
|
| 645,546 |
|
| 785,293 |
|
Due to a related party |
|
| 225,272 |
|
| 190,272 |
|
Total Current Liabilities |
|
| 872,015 |
|
| 1,136,101 |
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|
|
|
|
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Long Term Liabilities: |
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|
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|
Convertible Notes Payable, related party |
|
| 10,500,000 |
|
| 17,000,000 |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 11,372,015 |
|
| 18,136,101 |
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|
|
|
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|
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|
Stockholders’ Equity (Deficit): |
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|
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|
|
Preferred stock, par value $0.001; 50,000,000 shares authorized, no shares issued |
|
| — |
|
| — |
|
Common stock, par value $0.001; 500,000,000 shares authorized, 107,483,450 and 88,733,450 shares issued and outstanding; respectively |
|
| 107,483 |
|
| 88,733 |
|
Additional paid in capital |
|
| 5,083,349 |
|
| 3,171,197 |
|
Accumulated deficit |
|
| (10,863,577 | ) |
| (9,910,942 | ) |
Total Stockholders’ Deficit |
|
| (5,672,745 | ) |
| (6,651,012 | ) |
Total Liabilities and Stockholders’ Deficit |
| $ | 5,699,270 |
| $ | 11,485,089 |
|
The accompanying notes are an integral part of these condensed unaudited financial statements.
WEWARDS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
| For the three months ended November 30, |
|
| For the six months ended November 30, |
| ||||||||||
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| ||||
Revenue |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
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|
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Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
| 321,444 |
|
|
| 189,808 |
|
|
| 677,402 |
|
|
| 382,872 |
|
Research and Development expense |
|
| 15,218 |
|
|
| 1,007,332 |
|
|
| 15,218 |
|
|
| 2,038,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total expenses |
|
| 336,662 |
|
|
| 1,197,140 |
|
|
| 692,620 |
|
|
| 2,421,790 |
|
|
|
|
|
|
|
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|
|
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|
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Other expense: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest expense, related parties, net of interest income |
|
| (115,257 | ) |
|
| (160,459 | ) |
|
| (260,015 | ) |
|
| (311,692 | ) |
Total other expense |
|
| (115,257 | ) |
|
| (160,459 | ) |
|
| (260,015 | ) |
|
| (311,692 | ) |
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
Loss before provision for income taxes |
|
| (451,919 | ) |
|
| (1,357,599 | ) |
|
| (952,635 | ) |
|
| (2,733,482 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Provision for Income Taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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Net Loss |
| $ | (451,919 | ) |
| $ | (1,357,599 | ) |
| $ | (952,635 | ) |
| $ | (2,733,482 | ) |
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|
|
|
|
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Net loss per share – basic and diluted |
| $ | (0.00 | ) |
| $ | (0.17 | ) |
| $ | (0.01 | ) |
| $ | (0.34 | ) |
Weighted average shares outstanding – basic and diluted |
|
| 107,483,450 |
|
|
| 8,130,000 |
|
|
| 104,819,516 |
|
|
| 8,130,000 |
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|
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|
| |||||
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| August 31, 2019 |
|
| May 31, 2019 |
| ||
ASSETS |
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Current Assets: |
|
|
|
|
|
| ||
Cash |
| $ | 4,318,218 |
|
| $ | 4,508,397 |
|
Prepaid expenses |
|
| — |
|
|
| 25,000 |
|
Total current assets |
|
| 4,318,218 |
|
|
| 4,533,397 |
|
Right of use asset |
|
| 509,212 |
|
|
| 540,433 |
|
Total Assets |
| $ | 4,827,430 |
|
| $ | 5,073,830 |
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|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
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Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 100 |
|
| $ | 329 |
|
Accrued interest - related party |
|
| 1,046,850 |
|
|
| 912,123 |
|
Due to related parties |
|
| 225,272 |
|
|
| 225,272 |
|
Operating lease obligation |
|
| 131,296 |
|
|
| 128,705 |
|
Total Current Liabilities |
|
| 1,403,518 |
|
|
| 1,266,429 |
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities: |
|
|
|
|
|
|
|
|
Convertible Notes Payable - related party |
|
| 10,500,000 |
|
|
| 10,500,000 |
|
Operating lease obligation – noncurrent portion |
|
| 377,916 |
|
|
| 411,729 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 12,281,434 |
|
|
| 12,178,158 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001; 50,000,000 shares authorized, no shares issued |
|
| — |
|
|
| — |
|
Common stock, par value $0.001; 500,000,000 shares authorized, 107,483,450 and 107,483,450 shares issued and outstanding; respectively |
|
| 107,483 |
|
|
| 107,483 |
|
Additional paid in capital |
|
| 5,083,348 |
|
|
| 5,083,348 |
|
Accumulated deficit |
|
| (12,644,835 | ) |
|
| (12,295,159 | ) |
Total Stockholders’ Deficit |
|
| (7,454,004 | ) |
|
| (7,104,328 | ) |
Total Liabilities and Stockholders’ Deficit |
| $ | 4,827,430 |
|
| $ | 5,073,830 |
|
The accompanying notes are an integral part of thesecondensed unauditedfinancial statements.
WEWARDS, INC.
CONDENSED STATEMENTS OF CASH FLOWSOPERATIONS
(Unaudited)
|
| For the Six Months Ended November 30, |
| ||||
|
| 2018 |
| 2017 |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net loss for the period |
| $ | (952,635 | ) | $ | (2,733,482 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
Prepaid expenses |
|
| 200,010 |
|
| (230,500 | ) |
Accrued interest |
|
| 291,155 |
|
| — |
|
Accounts payable |
|
| (159,339 | ) |
| 311,780 |
|
Cash flows used in operating activities |
|
| (620,809 | ) |
| (2,652,202 | ) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Intangible assets |
|
| (432,200 | ) |
| — |
|
Cash flows used in investing activities |
|
| (432,200 | ) |
| — |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from a related party |
|
| 35,000 |
|
| 8,000,000 |
|
Repayment of related party loan |
|
| (5,000,000 | ) |
| — |
|
Cash flows provided by (used in) financing activities |
|
| (4,965,000 | ) |
| 8,000,000 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
| (6,018,009 | ) |
| 5,347,798 |
|
Cash, beginning of period |
|
| 10,794,298 |
|
| 7,238,261 |
|
Cash, end of period |
| $ | 4,776,289 |
| $ | 12,586,059 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
Interest paid |
| $ | — |
| $ | — |
|
Income taxes paid |
| $ | — |
| $ | — |
|
Supplemental disclosure of non-cash activity: |
|
|
|
|
|
|
|
Related party debt converted to common stock |
| $ | 1,500,000 |
| $ | — |
|
Forgiveness of accrued interest, related party, classified to additional paid in capital |
| $ | 430,902 |
| $ | — |
|
|
| For the Three Months Ended August 31, |
| |||||
|
| 2019 |
|
| 2018 |
| ||
Revenue |
| $ | — |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
| 191,703 |
|
|
| 223,458 |
|
General and administrative – related party |
|
| — |
|
|
| 87,500 |
|
Rent expense – related party |
|
| 45,000 |
|
|
| 45,000 |
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
| 236,703 |
|
|
| 355,958 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense– related party |
|
| (134,727 | ) |
|
| (157,877 | ) |
Interest income |
|
| 21,754 |
|
|
| 13,119 |
|
Total other expense |
|
| (112,973 | ) |
|
| (144,758 | ) |
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
| (349,676 | ) |
|
| (500,716 | ) |
|
|
|
|
|
|
|
|
|
Provision for Income Taxes |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | (349,676 | ) |
|
| (500,716 | ) |
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
Weighted average shares outstanding, basic and diluted |
|
| 107,483,450 |
|
|
| 102,184,537 |
|
The accompanying notes are an integral part of thesecondensed unauditedfinancial statements.
WEWARDS, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
(Unaudited)
| Preferred Stock |
| Common Stock |
|
| Additional Paid in |
|
| Accumulated |
|
|
|
| |||||||||||||
| Shares |
| Amount |
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| ||||||||
Balance at May 31, 2018 |
|
| — |
|
| — |
|
| 88,733,450 |
|
|
| 88,733 |
|
|
| 3,171,197 |
|
|
| (9,910,942 | ) |
|
| (6,651,012 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for conversion of debt – related party |
|
| — |
|
| — |
|
| 18,750,000 |
|
|
| 18,750 |
|
|
| 1,481,250 |
|
|
| — |
|
|
| 1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of accrued interest – related party |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| 430,902 |
|
|
| — |
|
|
| 430,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (500,716 | ) |
|
| (500,716 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2018 |
|
| — |
| $ | — |
|
| 107,483,450 |
|
| $ | 107,483 |
|
| $ | 5,083,349 |
|
| $ | (10,411,658 | ) |
| $ | (5,220,826 | ) |
| Preferred Stock |
| Common Stock |
|
| Additional Paid in |
|
| Accumulated |
|
|
|
| |||||||||||||
| Shares |
| Amount |
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| ||||||||
Balance at May 31, 2019 |
|
| — |
|
| — |
|
| 107,483,450 |
|
| $ | 107,483 |
|
| $ | 5,083,348 |
|
| $ | (12,295,159 | ) |
| $ | (7,104,328 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| — |
|
| — |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (349,676 | ) |
|
| (349,676 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2019 |
|
| — |
| $ | — |
|
| 107,483,450 |
|
| $ | 107,483 |
|
| $ | 5,083,348 |
|
| $ | (12,644,835 | ) |
| $ | (7,454,004 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of thesecondensed unaudited financial statements.
WEWARDS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
The accompanying notes are an integral part of thesecondensed unauditedfinancial statements.
WEWARDS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
November 30, 2018August 31, 2019
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
WEWARDS, INC. (the corporate name of which wasWewards, Inc. (formerly Global Entertainment Clubs, Inc. until January 8, 2018)) (“Wewards”, “the Company”) was incorporated in the state of Nevada on September 10, 2013 as Betafox Corp., with the initial intent to manufacture and sell color candles. On April 26, 2015, Giorgos Kallides (the “Seller”), entered into an Agreement for the Purchase of Common Stock (the “Stock Purchase Agreement”) with Future Continental Limited, (“Purchaser”) pursuant to which the Seller agreed to sell to Purchaser, six million (6,000,000) shares of common stock of the Company (the “Shares”) owned by the Seller, constituting approximately 73.8% of the Company’s 8,130,000 issued and outstanding common shares, for $340,000. The sale was consummated on May 11, 2015. As a result of the transfer of the shares, there was a change of control of the Company. The Company’s corporate office is located in Las Vegas, NV.Nevada.
January 8, 2018, by consent of Lei Pei, the principal shareholder, the Company changed its corporate name in Nevada to Wewards, Inc. The Company’s trading symbol is now WEWA.
On August 6, 2016 the Company signed Statements of Work (“SOWs”) with Intellectsoft LLC, an unaffiliated company, to perform services for the development and administration of websites to support a mobile app which will enable consumers to purchase goods with “Future World Group” vouchers,and earn rebates in the form of Bitcoin, and merchants will be able to sell their goods directly to the users, using this platform.
The SOWs provide that after this mobile app has been developed, Intellectsoft LLC will then proceed to phase 2, which is intended to be the development of this app for trade centers.white-label operators.
In addition to the SOWs with Intellectsoft, between August 20, 2016 and September 27, 2016, the registrant signed five SOWs with hedgehog lab, an unaffiliated UK-based company which is also unaffiliated with Intellectsoft, to provide additional services to the registrant in connection with the app being developed.As of May 31, 2019, The objective of these services, to be completed in two phases, is for the Company to become the exclusive worldwide licensee (except in the United States) for (1) creating a white labelled version of Future World which can be packaged up in a way by which small co-operatives of merchants can create their own eco systems of product selling and loyalty point trading, using “Future Vouchers”; (2) taking the current version of the app, improving the identified pain points and providing versions in English and Chinese, to allow the app to be used in Asia, Europe and North America (except the United States), by the merchants and customers in as short a time as possible; (3) having a loyalty point trading platform visualized within the new iOS and Android applications, as well as defining the distribution of future vouchers and loyalty points; and (4) the creation of a prototype of a 3D globe system, visualizing the potential for the globalization of the app into cities. The CompanyMerchant Platform (the “Platform”) has now acquired this technology from an affiliated entity and owns this technology.
The Company also intends to be the exclusive licensee of an online gaming platform, F&L Galaxy, Inc. (“F&L”), a company that is affiliated with the Company,, by virtue of common control by the Company’s principal shareholder and CEO, will purchase (from an affiliated, privately-owned company), the blockchain technology for use in setting up the global gaming platform. All IP addresses for the United States will be blockedbeen developed by the Company, which means that a US-based person will not be able to participate inis the global gaming platform. F&L intends to license the technology to the Company exclusively, and on a worldwide basis—except for the United States, and the Company then intends to sublicense the gaming platform to unaffiliated White Label licensees. The White Label sublicensees will pay the Company a sublicense fee for the useowner of the technology, each time that an end user signs up. AsPlatform. Development of the date of the filing of this Quarterly Report on Form 10-Q, no definitive agreements havePlatform began in 2016, and has now been signed by the Company with F&L, with respectcompleted, subject to the gaming platform.
As of the date of the filing of this Quarterly Report on Form 10-Q, the merchant platform has been completely developed, and the Company owns this technology;further improvements; however, no licenseelicense agreement has yet been signed by the Company, and no revenues have been generated. The gaming platform described above has not yet been completed and is not operational.
January 8, 2018,The Platform provides an innovative Bitcoin rewards ecosystem. It transforms the traditional concept of ecommerce, or commerce in general, into a concept of a cooperative society where both merchants and consumers are collaborating and Bitcoin will serve as the reward system, to acknowledge the value created by consent of Lei Pei, the principal shareholder,consumers for their contribution. The ecosystem provides consumers with rewards each time they complete a challenge defined by a merchant. This is intended to make the Company changed its corporate name in Nevadaecommerce process beneficial to WEWARDS, INC. The Company’s trading symbol is now WEWA.everyone, and to help distribute commercial wealth among and between the merchants and consumers.
5
WEWARDS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
November 30, 2018
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’saccompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensedfor interim financial statements reflectand with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all adjustments, consistinginformation and footnotes required by accounting principles generally accepted in the United States of only normal recurring items, which, inAmerica for annual financial statements. In the opinion of the Company’s management, arethe accompanying unaudited financial statements contain all the adjustments necessary for a fair statement(consisting only of normal recurring accruals) to present the financial position of the Company as of August 31, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the periods shown andpresented are not necessarily indicative of the operating results to be expected for the full fiscal year ending May 31, 2019 or any other periods.future period. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2018.2019 filed with the SEC.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
6
WEWARDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
August 31, 2019
(Unaudited)
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three months ended August 31, 2019.
Software Development costdevelopment costs
The Company expenses software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products. Software development costs also include costs to develop software to be used solely to meet internal needs and cloud-based applications used to deliver our services. The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Capitalization ends, and amortization begins when the product is available for general release to customers.
Impairment of Intangible Assets
The Company reviews intangible assets for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. The Company measures recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets or the asset group are expected to generate. If the carrying value of the assets are not recoverable, the impairment recognized is measured as the amount by which the carrying value of the asset exceeds its fair value.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three and six months ended November 30, 2018.
RecentRecently Adopted Accounting PronouncementsStandards
The Company has implemented all newreviewed other recently issued accounting pronouncements and plans to adopt those that are in effect. These pronouncements did not have any material impact on the condensed financial statements unless otherwise disclosed, and theapplicable to it. The Company does not believe that there areexpect the adoption of any other new accounting pronouncements thatto have been issued that might have a materialan impact on our financial position orits results of operations.operations or financial position.
NOTE 3 – GOING CONCERN
The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Although the Company currently has $4,776,289$4,318,218 of cash as of November 30, 2018,August 31, 2019, it also has total liabilities of $11,372,015$12,281,434 and has not completed its efforts to establish a stabilized source of revenues sufficient to cover its operating costs over an extended period of time. The Company has had no revenues to date,since inception and has an accumulated deficit of $10,863,577 and$12,644,835. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a stockholders’ deficitgoing concern. The financial statements do not include any adjustments that may result from the outcome of $5,672,745.these uncertainties.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. These conditionsexpenses until its planned operations begin to generate revenue. The Company is in the process of signing their first customers and is expecting to recognize its first revenue by the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed financial statementsend of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
6
WEWARDS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
November 30, 2018
(Unaudited)
second quarter.
NOTE 4 – INTANGIBLE ASSETSRELATED PARTY LOANS
During the year ended May 31, 2018, the Company began to capitalize costs incurred for the development of its software programs to be used in its revenue generating operation. As of May 31, 2018, and November 30, 2018, the Company had capitalized $806,325 and $374,125, respectively.
NOTE 5 – PREPAID EXPENSES
As ofNovember 30, 2018, the company had $116,656 of prepaid services for technical support fees to be provided over the next quarters.
NOTE 6 – RELATED PARTY TRANSACTIONS
As of November 30, 2018,August 31, 2019 and May 31, 2018,2019, the Company owed EDG Development, a company owned by Mr. Pei, $70,740 and $70,740, respectively. All funds expended to date have been used for professional fees, and for other general operating purposes. The loans are unsecured, non-interest bearing and due on demand.
As of November 30, 2018August 31, 2019 and May 31, 2018,2019, the Company owed F&L Galaxy, Inc., (a Company owned by Weward’s CEO)Mr. Pei), $12,582 and $12,582, respectively for software development expense. The loan is unsecured, non-interest bearing and due on demand.
On March 16, 2018, Wewards Inc. entered into a Master IT Services Agreement with F&L Galaxy Inc., by which F&L Galaxy Inc. agreed to provide technical support services to Wewards. Per the terms of the agreement the Company paid $350,000 on April 2, 2018 for services to be provided from April 1, 2018 through March
7
WEWARDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
August 31, 2019. As of November 30, 2018, the Company has expensed $233,334 and has a prepaid expense to F&L Galaxy of $116,656 (Note 5).2019
(Unaudited)
As of November 30, 2018August 31, 2019 and May 31, 2018,2019, the Company owed Mr. Pei $141,950 and $106,950,$141,950, respectively. All funds expended to date have been used for professional fees, and for other general operating purposes. The loans are unsecured, non-interest bearing and due on demand.
For the sixthree months ended November 30,August 31, 2019 and 2018, the Company imputedaccrued interest at 5% on the above loans accruing $4,796 to accruedfor interest expense.expense of $2,398 and $2,398, respectively.
On March 1, 2018, the Company began occupying its new corporate headquarters at 2960 West Sahara Avenue, Las Vegas, NV 89102. The Company signed a five-year sublease with United Power, Inc. (“Power”), an affiliate of the Company by reason of common ownership with Lei Pei, the Company’s sole officer and director and majority shareholder, at a base monthly rent of $15,000, plus a possible increase of up to 3% each year based on increases, if any, of the Consumer Price Index. The building is owned by Future Property Limited (“Future”), another affiliate of the Company because of common ownership; Future entered into a lease with Power, and the Company then sublet the space from Power. The RegistrantCompany is occupying the space for executive and administrative offices. Rent expense for the sixthree months ended November 30,August 31, 2019 and 2018was $90,000.$45,000 and $45,000, respectively.
Convertible Promissory NoteNotes
On each of August 1, 2016 and August 3, 2016, Sky Rover Holdings, Ltd., a California corporation (“Sky Rover”) which is 100% owned by Lei Pei, the CEO and principal shareholder, loaned $500,000 to the Company (total of $1,000,000). Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on August 1, 2019, and is convertible in whole or in part, at the option of the holder, into common shares at any time before the due date, at a conversion price of $0.04 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. All funds expended to date have been used for professional fees, other general operating purposes and for payments in accordance with the SOWs discussed in Note 1. On March 5, 2018, Sky Rover converted the $1,000,000 and $79,990 of accrued interest into 26,999,750 shares of common stock, repaying this loan in full.
7
WEWARDS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
November 30, 2018
(Unaudited)
On September 27, 2016, Sky Rover loaned an additional $2,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on September 27, 2019, and is convertible, in whole or in part, at the option of the holder, into common shares at any time before the due date, at a conversion price of $0.04 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. All funds expended to date have been used for professional fees, other general operating purposes and for payments in accordance with the SOWs discussed in Note 1. On March 5, 2018, Sky Rover converted the $2,000,000 and $144,148 of accrued interest into 53,603,700 shares of common stock, repaying this loan in full.
On February 23, 2017, Sky Rover loaned an additional $1,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on February 23, 2020, and is convertible, in whole or in part, at the option of the holder, into common shares at any time before the due date, at a conversion price of $0.08 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. All funds expended to date have been used for professional fees, other general operating purposes and for payments in accordance with the SOWs discussed in Note 1. On June 26, 2018, the Company repaid the $1,000,000 loan. Sky Rover waived all accrued and unpaid interest of $66,998, which has been credited to additional paid in capital.
February 26, 2017, Sky Rover agreed to loan up to an additional $20,000,000 to the Company, of which $8,000,000 was loaned on February 28, 2017. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on February 26, 2020, and is, in whole or in part, at the option of the holder, convertible into common shares at any time before the due date, at a conversion price of $0.08 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. On June 26, 2018, the Company repaid the $4,000,000 of the loan. In addition, Sky Rover converted $1,500,000 into the common shares, at the Notes’ conversion price of $.08 per share. As a result of this conversion, the Company issued a total of 18,750,000 shares. Sky Rover waived accrued and unpaid interest of $363,904, which has been credited to additional paid in capital. As of November 30, 2018,August 31, 2019, there is $2,500,000 and $220,289$314,125 of principal and accrued interest, respectively, due on this loan.
On November 20, 2017, Sky Rover loaned the remaining $8,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on November 20, 2020, and is, in whole or in part, at the option of the holder, convertible into common shares at any time before the due date, at a conversion price of $0.08 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. As of November 30, 2018August 31, 2019 there is $410,959$711,233 of accrued interest on this loan.
If and when Sky Rover converts the remaining $10,500,000 of Notes at the present conversion price of $.08 per share to 131,250,000 shares, those shares, plus the approximate 101,353,450 shares Mr. Pei currently owns, would give him beneficial ownership of 232,603,450 of the Company’s 238,733,450 then-issued and outstanding shares (assuming that no other shares are issued before conversion), which would be approximately 97.4% of the then-outstanding shares.
8
WEWARDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
August 31, 2019
(Unaudited)
NOTE 75 – COMMITMENTS AND CONTINGENCIES
Future minimum
On March 9, 2018, the Company entered into a sublease agreement for office space in Las Vegas, NV, with United Power, a related party. The lease is considered an operating lease, requires monthly payments of $15,000 and expires March 8, 2023. We have accounted for the Company’s new corporate headquarters (Note 6) arelease under ASU 842 Leases, as follows:follows.
Years ending May 31, |
|
|
| |
2019 |
| $ | 90,000 |
|
2020 |
|
| 180,000 |
|
2021 |
|
| 180,000 |
|
2022 |
|
| 180,000 |
|
2023 |
|
| 180,000 |
|
Total |
| $ | 810,000 |
|
|
| Balance Sheet Classification |
| August 31, 2019 |
| |
Asset |
|
|
|
|
|
|
Operating lease asset |
| Right of use asset |
| $ | 509,212 |
|
Total lease asset |
|
|
| $ | 509,212 |
|
|
|
|
|
|
|
|
Liability |
|
|
|
|
|
|
Operating lease liability – current portion |
| Current operating lease liability |
| $ | 131,296 |
|
Operating lease liability – noncurrent portion |
| Long-term operating lease liability |
|
| 377,916 |
|
Total lease liability |
|
|
| $ | 509,212 |
|
8Lease obligations at August 31, 2019 consisted of the following:
WEWARDS, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
November 30, 2018
(Unaudited)
For the year ended May 31: |
|
|
|
|
| |
2020 |
|
|
| $ | 135,000 |
|
2021 |
|
|
|
| 180,000 |
|
2022 |
|
|
|
| 180,000 |
|
2023 |
|
|
|
| 135,000 |
|
Total payments |
|
|
| $ | 630,000 |
|
Amount representing interest |
|
|
| $ | (120,788 | ) |
Lease obligation, net |
|
|
|
| 509,212 |
|
Less current portion |
|
|
|
| (131,296 | ) |
Lease obligation – long term |
|
|
| $ | 377,916 |
|
NOTE 8 – PREFERRED STOCKThe lease expense for the three months ended August 31, 2019 was $45,000 which consisted of amortization expense of $31,221 and interest expense of $13,779 after the adoption of the new lease standard on January 1, 2019.
The Company has authorized preferred stockcash paid under this operating lease during three months ended August 31, 2019 was $45,000. We have used a discount rate of 50,000,000 shares, par value $.001 per share. The voting powers, conversion features, if any, designations, preferences, limitations, restrictions and other rights of the preferred stock shall be prescribed by resolution of the Board of Directors at the time a specific series of preferred stock is designated. None of the preferred shares have been issued as of the date of this Report.8%.
NOTE 96 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the condensed financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these condensed financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our condensed financial statements, including the notes thereto, appearing elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report ". Our unaudited condensed financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
RESULTS OF OPERATIONS
Results of Operations for the Three Months ended November 30, 2018August 31, 2019 Compared to the Three Months ended November 30, 2017August 31, 2018
General and administrativeOperating Expenses
During the three months ended November 30, 2018,August 31, 2019, we incurred total operating expenses of $336,662$236,703 compared to $1,197,140$355,958 incurred during the three months ended November 30, 2017. InAugust 31, 2018. Operating expenses consist of the following.
During the three months ended November 30, 2018, expenses toward the development and administrationAugust 31, 2019, we incurred related party rent expense of the websites to support our mobile app in accordance with the SOWs discussed in Note 1 totaled $15,218$45,000 compared to $1,007,332$45,000 incurred during the three months ended August 31, 2018. Our sublease for office space began in the prior period. March 2018.
During the current period a majority of these expenses have been capitalized. We alsothree months ended August 31, 2019, we incurred general and administrative (“G&A”) expenses of $321,444$191,703 compared to $189,808$310,958 incurred during the three months ended August 31, 2018, a decrease of $119,255 or 38.3%. G&A expenses have decrease largely due to a decrease in the prior period. The increase can be attributed to an increase in technical supportconsulting expense and advertising and promotion expense.other professional fees.
Other Expense
During the three months ended November 30, 2018,August 31, 2019, we incurred interest expense to related parties, net of interest income, of $115,257$134,727 compared to $160,459 of interest expense$157,877 incurred during the three months ended November 30, 2017.August 31, 2018,a decrease of $23,150, or 14.6%. Interest expense is due to the convertible promissory notes with Sky Rover Holdings, Ltd. And other related party loans (Note 5)4) and has decreased due to the conversion of and repayment of some of those notes.
During the three months ended August 31, 2019, we had interest income of $21,754 compared to $13,119 during the three months ended August 31, 2018.
Net Loss
Our net loss for the three months ended November 30, 2018August 31, 2019 was $451,919,$349,676, compared to a net loss of $1,357,599$500,716 for the prior periodthree months ended November 30, 2017.August 31, 2018. The decrease in net loss is a direct result of the decrease in development fees in connection with our mobile app.
Results of Operations for the Six Months ended November 30, 2018 Compared to the Six Months ended November 30, 2017
General and administrative
During the six months ended November 30, 2018, we incurred total operating expenses of $692,620 compared to $2,421,790 incurred during the six months ended November 30, 2017. In the six months ended November 30, 2018, expenses toward the development and administration of the websites to support our mobile app in accordance with the SOWs discussed in Note 1 totaled $15,218 compared to $2,038,918 in the prior period. During the current period a majority of these expenses have been capitalized. We also incurred general and administrative expenses of $677,402 compared to $382,872 in the prior period. The increase can be attributed to an increase in technical support and advertising and promotionG & A expense.
Other Expense
During the six months ended November 30, 2018, we incurred interest expense to related parties, net of interest income, of $260,015 compared to $311,692 of interest expense incurred during the six months ended November 30, 2017. Interest expense is due to the convertible promissory notes with Sky Rover Holdings, Ltd. (Note 5) and has decreased to the conversion of and repayment of some of those notes.
Net Loss
Our net loss for the six months ended November 30, 2018 was $952,635, compared to a net loss of $2,733,482 for the prior period ended November 30, 2017. The decrease in net loss is a direct result of the decrease in development fees in connection with our mobile app.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. During the sixthree months ended November 30,August 31, 2019, net cash flows used in operating activities was $190,179. For the same period ended August 31, 2018, net cash flows used in operating activities was $620,809. For the same period ended November 30, 2017, net cash flows used in operating activities was $2,652,202.$370,233.
Cash Flows from Investing Activities
During the sixthree months ended November 30, 2018,August 31, 2019, we used $432,200$0 in investing activities compared to $0$432,200 for the same period ended November 30, 2017August 31, 2018.
Cash Flows from Financing Activities
For the sixthree months ended November 30,August 31, 2019, net cash used in financing activities was $0. For the three months ended August 31, 2018, net cash used in financing activities was $4,965,000. For the six months ended November 30, 2017, net cash from financing activities was $8,000,000. In 2018, $35,000 was received by way of a loan from our sole officer, director and principal shareholder, and the Company repaid $5,000,000 on the related party loans. (see Note 6)4)
As of November 30, 2018,August 31, 2019, the company had cash of $4,776,289$4,318,218 to be used for operation over at least the next twelve months.
PLAN OF OPERATION AND FUNDING
Unless and until we acquire an ongoing business,or until we begin to generate revenues and positive cash flow from the merchant platform or the game platform, as to which there is no assurance, we expect that working capital requirements will continue to be funded through related party loans and/or further issuances of other securities. There is no assurance that we will be able to meet our working capital requirement from either possible source.
We have no lines of credit or other bank financing arrangements. To date, we have been wholly dependent upon our CEO and majority shareholder Mr. Pei, and his affiliated companies, to provide financing to the Registrant, most of the time via convertible loans. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, and we might be unable to continue in business.
As of the date of the filing of this Quarterly Report on Form 10-Q, the merchant platform has been completely developed, and the Company owns this technology; however, no licensee has yet been signed by the Company, and no revenues have been generated. The game platform described above has not yet been completed and is not operational.
MATERIAL COMMITMENTS
As of the date of this Quarterly Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not have any agreements at this time, to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer noted the deficiencies in internal controls identified in this Item 4. Accordingly, the Company’s Chief Executive Officer and Chief Financial Officer has concluded that, as of the Evaluation Date, such controls and procedures were not effective.
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of November 30, 2018August 31, 2019 using the criteria established in the 2013 version of “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of November 30, 2018,August 31, 2019, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
| 1. | We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the single-member Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
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| 2. | We did not maintain appropriate cash controls – As of |
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| 3. | Lack of segregation of duties—We currently have no employees other than our CEO and CFO—the same person. Therefore, all accounting information is currently reviewed only by one person. |
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of November 30, 2018,August 31, 2019, based on criteria established in Internal Control Integrated Framework issued by COSO. The Company has adopted new procedures, which were approved by the Board of Directors on September 14, 2018, and were filed as an Exhibit to the Company’s Annual Report, which was filed with the SEC on September 20, 2018.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of November 30, 2018,August 31, 2019, that occurred during our second fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, as noted above, on September 14, 2018, the Company adopted new procedures, which were approved by the Board of Directors on September 14, 2018, and were filed as an Exhibit to the Company’s Annual Report, which was filed with the SEC on September 20, 2018.
PART II. OTHER INFORMATION
We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
On October 11, 2018, the Board of Directors of WEWARDS, INC. approved the appointment of PRAGER METIS, LLC, CPAs (“PragerMetis”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending May 31, 2019, and dismissed Michael Gillespie & Associates, PLLC. The engagement of PRAGER METIS was approved by the Company’s Board of Directors.None.
The following exhibits are included as part of this report by reference:
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| Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a). | |
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| Certification pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. | |
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| Interactive data files pursuant to Rule 405 of Regulation S-T. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| WEWARDS, INC. |
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| By: | /s/ Lei Pei |
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| Lei Pei |
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| President and Chief Executive Officer and Chief Financial Officer |
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1514